Delay in Settlement of drawback - Customs Clarifies
IN a recent Trade Facilitation meeting in the JN Customs, an importer raised this issue:
As per the requirement of Customs exporters submit negative statement to the customs in support of drawback claims. Even after submitting the negative statement, Customs comes out with XOS statement as per RBI, and asks for BRCs, even cases pertaining to 2003, 2004 which are very old, and puts the exporters into alert, thereby, denying the drawback claims. Suggest, customs must follow one procedure for settlement of claims (say BRCs, rather than asking for negative statements, certificates etc.)
The Department replied:
Where an amount of drawback has been paid to an exporter but the sale proceeds in respect of such export goods have not been realised within the time allowed under the Foreign Exchange Management Act (FEMA), 1999, such drawback amount is to be recovered. If the exporter fails to produce evidence in respect of realization of export proceeds within the period allowed under the FEMA, 1999 or as extended by the Reserve Bank of India (RBI), the Assistant/Deputy Commissioner of Customs shall issue a notice to the exporter for production of evidence of realization of export proceeds, failing which an order shall be passed to recover the amount of drawback paid to the claimant. Thus, the drawback payment is ultimately linked to the realization of export proceeds.
As per the CBEC Circular no.05/2009 dated 02.01.2009, the exporters are required to furnish the BRCs/negative statement in the prescribed Annexure in respect of all the Drawback Shipping Bills. Once the exporter submits the negative statements/certificates issued by the Authorised Dealers/Chartered Accountants, the BRC section scrutinizes /verifies the negative certificates and updates the system using the BRC entry module. Upon updating the system, if any BRC pendency is noticed in respect of any Drawback Shipping Bill upto 30.06.2014, the IEC alert is not revoked until the BRC pendency is cleared.
Presently, the BRC entry module gives three options for entering the details of foreign exchange realization:
1. If the exporter furnishes the BRCs as a proof of foreign exchange realization, the officer chooses option (1) and enters the specific shipping bill numbers and dates. Such shipping bills are deleted by the system from the list of shipping bills pending for realization of export proceeds.
2. If the exporter produces a “negative statement” for a specified period from the AD/Chartered accountant that no foreign exchange is pending realization from the exporter in the given period, the officer chooses option (2). The system automatically displays the S/Bs pertaining to the given period on screen and once the officer approves, all such shipping bills are deleted from the pendency list.
3. If the negative statement furnished by the exporter gives the list of S/Bs, for a particular period, for which foreign exchange has not been realized (and by implication foreign exchange has been realized for all other S/Bs), then the officer chooses option (3). This option allows the officer to enter the S/Bs for which the BRCs are pending. Thereafter, all S/Bs except such pending S/Bs are deleted from the list.
From the above, it is clear that the exporter has the option to submit the BRC (Shipping Bill wise)/Negative statements from the Authorised Dealers/Chartered Accountants and both are being considered by the BRC section for updating the BRC pendency. Updating the BRC details as per the Negative Statements is much faster as compared to the shipping bill-wise updation (as per the BRCs) which can at times be very time consuming.
Thus the suggestion from the trade that the Customs must follow one procedure for settlement of claims by way of BRCs is already made available to the exporters. In fact, the concept of submission of negative statements was brought out as a measure of simplification and trade facilitation as expecting the exporters to submit the Drawback shipping bill-wise BRCs would sometimes result in delays and hardships.